DIEM (1) 2019 17 Tanja Gavrić Sveučilište „Vitez“, Travnik, Bosna i Hercegovina E-mail: tanja.gavric@unvi.edu.ba Matej Mlakić Ekonomski fakultet Zagreb E-mail: mmlakic@net.efzg.hr CHALLENGES OF THE FOURTH INDUSTRIAL REVOLUTION: A CASE STUDY OF BOSNIA AND HERZEGOVINA Original scientific paper UDK: 004(497.6) JEL classification: O33 Accepted for publishing: October 31, 2019 Abstract This study focuses on Industry 4.0 in developing countries and, in particular, that of Bosnia and Herzegovina, which is one of the least competitive economies in the Region. A review of the literature on Industry 4.0 and the current prospect of it in the developing countries will be presented and then collecting the required data from the secondary data. This study aims to explore the main challenges along with some opportunities to apply Industry 4.0 in Bosnia and Herzegovina. The challenges that will be tested include poor infrastructure, harmonization of the education system and labour market, expensive installation of technologies, lack of government supports and growing trend of depopulation. Through insight into the structure of world trade and technology achievement, we will also look at the fact that the new industrial revolution will bring an even greater gap between developed and developing countries and try to answer the question of why such a disproportion in development occurs. As this is one of the first research projects regarding Industry 4.0 in Bosnia and Herzegovina, the findings of the study will generate some recommendations and propose some alternatives to be considered that could be useful for the decision-makers both in government and the private sector. Keywords: Industry 4.0, developing countries, challenges, disproportion 1. INTRODUCTION AND BACKGROUND The industrial sector is important to every country’s economy and remains the driver of growth and employment. More attention is devoted to the implications of the integration of new technological products and services and the creation of industrial values. New technologies evolve at an exponential rate and there is no historical precedent that marked the beginning of evolution. These moves are followed by the emergence of artificial intelligence, robotics, the Internet of things, autonomous vehicles, both nanotechnology, 3-D printing, material science, quantum computing and storage energy (Hussin, 2018). This new paradigm of digitized and related products is called "Industry 4.0". The term “Industry 4.0” became publicly known in 2011, when an initiative called “Industry 4.0” where an association of representatives from business, politics, and academia promote the idea as an approach to strengthen the competitiveness of German manufacturing industry (Hermann, Pentek i Otto, 2015). The idea of Industry 4.0 includes a wide variety of devices,